MEA 12MP Kick-Off Conference

Dr. Firas Raad

World Bank Country Manager for Malaysia
12th Malaysia National Development Plan Kick-Off Conference
July 3, 2019 - Putrajaya

The Human Capital Index

Measuring Productive Human Capital
 MEA 12MP Kick-Off Conference

The Human
Capital Project
• 3 pillar strategy to achieve WBG Twin Goals
• drive inclusive and sustainable growth, build resilience,
invest in people
• Technology accelerating aspirations and changing work

• Motivation derives from a confluence of factors:

1. Human capital and economic growth

- body of economic literature (micro and macro)
- individual and social returns to education
- economic growth models (Romer, Lucas)
 MEA 12MP Kick-Off Conference

The Human
Capital Project
2. Global development agenda
Winning the Human Race’ (ICIHI) in 1980s
UNDP’s Human Development Index 1990
WDR in 1993 on ‘Investing in Health’
Creation of HD Network within WBG 1997
Global Fund for HIV-AIDs, TB and Malaria 2002
MDGs (four of the eight were related to HC)

3. Urgency to accelerate efforts (after SDGs)

Winning Back the Human Race 2017
UN High-Level Meeting on NCDs 2018
WBG WDR on ‘Realizing the Promise of Education ’
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2018 World Development Report

Realizing the Promise of Education
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Global Crisis in Learning Outcomes

• Key Messages
• Schooling is not the same as learning and nothing inevitable
about low levels of learning

• The Three Dimensions of the Learning Crisis

• Poor learning outcomes themselves
• Immediate causes (unprepared to learn, unskilled to teach,
inputs and management)
• Deeper systemic causes

• The Three Policy Actions to Address the Crisis

• Assess learning - to make it a serious goal
• Act on evidence - to make schools work for learners
• Align actors - to make the system work for
learning
 MEA 12MP Kick-Off Conference
The Human Capital Project
1 Kick-start and deepen
the national human
capital conversation
with data.
Human Capital Index
The HCI measures the
human capital of the next
generation, providing a
way to discuss and think
about human capital.
2 Understand what
matters for human
capital and how
individuals acquire it.
Measurement
A program to improve
measurement and provide
analysis to support effective
investments in human capital
formation.
Objectives & components
3 Accelerate
investments in
human capital.
Country
engagement
Using new approaches and
tools to identify specific
actions, policy measures,
and investments to
improve human capital
outcomes.
MEA 12MP Kick-Off Conference
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The Human Capital Index Components

1 Survival 2 School 3 Health

Will kids born today, How much school will they How much health will kids leaving
survive to school age? complete and how much school have? Will they be ready
will they learn? for further learning and/or work?
1.1 2.1 3.1
Under-5 survival rate Expected years of Not stunted
school by age 18 prevalence
2.2

Proxies
Harmonized 3.2
student test scores Adult survival rate
2.3
Quality adjusted years of Overall health status of
expected schooling population

𝝓 Earnings per additional 𝜸 Earnings per additional

Available population-level
measures of health & year of schooling (returns unit of health (returns to
education status to school) health)
Productivity parameters
 MEA 12MP Kick-Off Conference

The Human Capital Index Components

1 Survival 2 School 3 Health

Will kids born today, How much school will they How much health will kids leaving
survive to school age? complete and how much school have? Will they be ready
will they learn? for further learning and/or work?
1.1 2.1 3.1
Under-5 survival rate Expected years of Not stunted
school by age 18 prevalence
2.2

Proxies
Harmonized 3.2
student test scores Adult survival rate
2.3
Quality adjusted years of Overall health status of
expected schooling population

𝝓 Earnings per additional 𝜸 Earnings per additional

Available population-level
measures of health & year of schooling (returns unit of health (returns to
education status to school) health)
Productivity parameters
 MEA 12MP Kick-Off Conference

The Human Capital Index Components

1 Survival 2 School 3 Health

Will kids born today, How much school will they How much health will kids leaving
survive to school age? complete and how much school have? Will they be ready
will they learn? for further learning and/or work?
1.1 2.1 3.1
Under-5 survival rate Expected years of Not stunted
school by age 18 prevalence
2.2

Proxies
Harmonized 3.2
student test scores Adult survival rate
2.3
Quality adjusted years of Overall health status of
expected schooling population

𝝓 Earnings per additional 𝜸 Earnings per additional

Available population-level
measures of health & year of schooling (returns unit of health (returns to
education status to school) health)
Productivity parameters
 MEA 12MP Kick-Off Conference

The Human Capital Index Components

1 Survival 2 School 3 Health

Will kids born today, How much school will they How much health will kids leaving
survive to school age? complete and how much school have? Will they be ready
will they learn? for further learning and/or work?
1.1 2.1 3.1
Under-5 survival rate Expected years of Not stunted
school by age 18 prevalence
2.2

Proxies
Harmonized 3.2
student test scores Adult survival rate
2.3
Quality adjusted years of Overall health status of
expected schooling population

𝝓 Earnings per additional 𝜸 Earnings per additional

Available population-level
measures of health & year of schooling (returns unit of health (returns to
education status to school) health)
Productivity parameters
 MEA 12MP Kick-Off Conference

The Human Capital Index Aggregation of components

1 Survival 2 School 3 Health

1.1 2.1
3.1
Under-5 Quality adjusted Not stunted prevalence
survival rate years of schooling
3.2
Adult survival rate
Country Country Country
100% survival value 14 100% not stunted/
value 0 value
0% probability years years 0% survival
x x x probability
MIN MAX MIN MAX MIN MAX
Human capital Human capital Human capital
shortfall in shortfall in shortfall in
survival (x/1) education (x-14) health (x-1)

The GAP GAP

GAP

= x 𝝓 x 𝜸
Human
Expected productivity gap Expected productivity
=== gap Expected productivity gap
Capital resulting from loss of resulting from less than resulting from less than
future workers potential education potential health
Index
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Childhood Survival

Source: World Bank MEM 2019

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Childhood Learning

Source: World Bank MEM 2019

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MEA 12MP Kick-Off Conference
MEA 12MP Kick-Off Conference
 MEA 12MP Kick-Off Conference

What Can Malaysia do to Fully

Realize it HC Potential?
• Enhance Learning Outcomes
• Improve quality of early childhood education that
learners are ready to learn
• Focus the assessment system on learning and make
better use of data
• Address Childhood Stunting
• Conduct analysis of underlying drivers
• Employ multi-sectoral approaches
• Expand social safety nets
• Design Programs to Promote Human Capital
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Human Capital Project

One Year Mark

• More than 60 countries signed as up early adopters

• Innovative country-level engagements
• Geo-Enabling Initiative for Monitoring and Supervision in
Chad

• Vision remains to ‘create a world in which all children

arrive in school well-nourished and ready to learn, can
expect to learn in safe and inclusive schools with skilled
teachers and age appropriate materials; and are able to
enter the job market as healthy, skilled and productive
adults’
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Mindspark
• The Mindspark app uses
millions of data points
from student tests to
figure out common
mistakes children make
answering math problems,
and the program designs
remedial exercises for
each student. This
platform has helped
80,000 students across
India improve math and
Hindi skills
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